Mark Wilson/Getty; Naohiko Hatta/Getty; Shayanne Gal/Business InsiderThe chief trade negotiator for the Trump administration confirmed President Donald Trump's Sunday tweet, telling reporters that tariffs on $200 billion worth of Chinese goods will increase Friday at 12:01 a.m. ET.
According to US Trade Representative Robert Lighthizer the 10% tariff rate will rise to 25%, as Trump threatened. Lighthizer and Treasury Secretary Steven Mnuchin said the increase was triggered by China's sudden reversal on key agreements in trade talks.
The move marks a sudden re-escalation of the yearlong trade war between the US and China.According to Lighthizer, the Chinese reneged on key promises made earlier in talks that aim to craft a deal to end the trade war. Both sides previously seemed confident that a deal was close at hand.
Trump took investors and trade experts by surprise on Sunday in which he threatened to increase the tariff rate on $200 billion worth of Chinese good and apply new tariffs to the remaining $325 billion of Chinese goods that have so far not been tied up by the trade war.
The threat led to a substantial sell-off in global markets, though the major US indexes recovered through Monday's trading.
The threat also comes as a Chinese delegation is set to travel to Washington to discuss a trade deal on Thursday and Friday. There was initially uncertainty over whether the envoy from Beijing would attend after Trump's threat and it is still unclear if Vice Premier Liu He, the country's top economic official, will join the delegation.
Economists have warned an escalation of the trade war is the biggest threat to the US economy and multiple studies have shown that a predominate amount of the burden from Trump's tariffs have been borne by American companies and consumers.